Treatment of Medicaid Waiver Payments

In January, 2014, the Internal Revenue Service issued Internal Revenue Bulletin 2014-4 and Notice 2014-7 regarding the treatment of income from qualified foster care payments, Medicaid waiver payments, and difficulty of care payments under IRC § 131. As the bulletin and notice explains, such payments are excludable from income for federal income tax purposes when certain conditions apply.

Because Idaho follows federal law in calculating adjusted gross income, Idaho will also exclude such payments as prescribed in the bulletin and notice from calculations of Idaho taxable income. No additions will be required on Schedule 39R or Schedule 39NR to add back the income excluded on the federal return.

Individuals amending their federal return as a result of this bulletin may also amend their state return. To ensure proper filing of the amended return, include a copy of the federal amended return along with an explanation for the amendment.